The impact of digital transformation on entrepreneurial activity. Empirical evidence from the European Union
Abstract
The paper explores the impact of digital transformation (DT) on new business creation in the case of European Union member states over the period 2015–2020 by employing several econometric techniques such as Ordinary Least Squares (OLS) and quantile regression (QR). The results of OLS regression indicate a positive and significant link between DT and entrepreneurial activity. However, the quantile regression results highlight a parameter heterogeneity in the effect of DT on entrepreneurial activity. Furthermore, the magnitude of the impact is greater at the higher size quantiles of the new business density distribution. Overall, the empirical findings highlight the key role of DT in developing public policies aimed to spur entrepreneurial activity. Thus, this paper brings significant contributions to the extant literature on the macro determinants of firm creation.
Keyword : digital transformation, Digital Economy and Society Index, digital skills, digital public services, entrepreneurial activity, new business creation, European Union, quantile regression
How to Cite
Anton, S. G. (2024). The impact of digital transformation on entrepreneurial activity. Empirical evidence from the European Union. Journal of Business Economics and Management, 25(2), 297–314. https://doi.org/10.3846/jbem.2024.21113
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Liu, T. -C. (2022). Digital policy in European countries from the perspective of the Digital Economy and Society Index. Policy & Internet, 14(1), 202–218. https://doi.org/10.1002/poi3.274
Nambisan, S. (2017). Digital entrepreneurship: Toward a digital technology perspective of entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055. https://doi.org/10.1111/etap.12254
Newman, C., Rand, J., Talbot, T., & Tarp, F. (2015). Technology transfers, foreign investment and productivity spillovers. European Economic Review, 76, 168–187. https://doi.org/10.1016/j.euroecorev.2015.02.005
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Andrei, J. V., Chivu, L., Sima, V., Gheorghe, I. G., Nancu, D., & Duică, M. (2022). Investigating the digital convergence in European Union: An econometric analysis of pitfalls and pivots of digital economic transformation. Economic Research-Ekonomska Istraživanja, 36(2), Article 2142814. https://doi.org/10.1080/1331677X.2022.2142814
Anton, S. G., & Bostan, I. (2017). The role of access to finance in explaining cross-national variation in entrepreneurial activity: A panel data approach. Sustainability, 9(11), Article 1947. https://doi.org/10.3390/su9111947
Arenal, A., Feijoo, C., Moreno, A., Ramos, S., & Armuña, C. (2021). Entrepreneurship policy agenda in the European Union: A text mining perspective. Review of Policy Research, 38(2), 243–271. https://doi.org/10.1111/ropr.12416
Audretsch, D. B., & Fritsch, M. (1994). The geography of firm births in Germany. Regional Studies, 28(4), 359–365. https://doi.org/10.1080/00343409412331348326
Autio, E., Nambisan, S., Thomas, L. D. W., & Wright, M. (2018). Digital affordances, spatial affordances and the genesis of entrepreneurial ecosystems. Strategic Entrepreneurship Journal, 12(1), 72–95. https://doi.org/10.1002/sej.1266
Awoa, P. A., Efogo, F. O., & Ondoa, H. A. (2023). Oil dependence and entrepreneurship: Non-linear evidence. Economic Systems, 47(1), Article 101059. https://doi.org/10.1016/j.ecosys.2022.101059
Barnes, M. L., & Hughes, A. W. (2002). A quantile regression analysis of the cross-section of stock market returns. (Working Paper). SSRN. https://doi.org/10.2139/ssrn.458522
Berrill, J., O’Hagan-Luff, M., & van Stel, A. (2018). The moderating role of education in the relationship between FDI and entrepreneurial activity. Small Business Economics, 54, 1041–1059. https://doi.org/10.1007/s11187-018-0121-6
Bughin, J., Hazan, E., Labaye, E., Manyika, J., Dahlström, P., Ramaswamy, S., & Cochin de Billy, C. (2016). Digital Europe: Pushing the frontier, capturing the benefits. McKinsey & Company. https://www.mckinsey.com/~/media/mckinsey/business%20functions/mckinsey%20digital/our%20insights/digital%20europe%20pushing%20the%20frontier%20capturing%20the%20benefits/digital-europe-full-report-june-2016.ashx
Coad, A., & Rao, R. (2008). Innovation and firm growth in high-tech sectors: A quantile regression approach. Research Policy, 37(4), 633–648. https://doi.org/10.1016/j.respol.2008.01.003
Cordier, I., & Bade, M. (2022). The relationship between business regulation and nascent and young business entrepreneurship revisited. Small Business Economics, 61, 587–616. https://doi.org/10.1007/s11187-022-00707-5
Cumming, D. J., & Schwienbacher, A. (2018). Fintech venture capital. Corporate Governance: An International Review, 26(5), 374–389. https://doi.org/10.1111/corg.12256
Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2002). The regulation of entry. The Quarterly Journal of Economics, 117(1), 1–37. https://doi.org/10.1162/003355302753399436
Elia, G., Margherita, A., & Passiante, G. (2020). Digital entrepreneurship ecosystem: How digital technologies and collective intelligence are reshaping the entrepreneurial process. Technological Forecasting and Social Change, 150, Article 119791. https://doi.org/10.1016/j.techfore.2019.119791
European Commission. (2020). Digital Economy and Society Index (DESI) 2020. https://digital-strategy.ec.europa.eu/en/library/digital-economy-and-society-index-desi-2020
European Commission. (2017). Digital single market: Commission calls for swift adoption of key proposals and maps out challenges ahead. http://europa.eu/rapid/press-release_IP-17-1232_en.htm
European Investment Bank. (2022). Digitalisation in Europe 2021–2022: Evidence from the EIB Investment Survey. https://www.eib.org/attachments/publications/digitalisation_in_europe_2021_2022_en.pdf
Fossen, F. M., & Sorgner, A. (2021). Digitalization of work and entry into entrepreneurship. Journal of Business Research, 125, 548–563. https://doi.org/10.1016/j.jbusres.2019.09.019
Gaies, B., Najar, D., Maalaoui, A., Kraus, S., & El Tarabishy, A. (2021). Does financial development really spur nascent entrepreneurship in Europe? – A panel data analysis. Journal of Small Business Management, 61(6), 2440–2487. https://doi.org/10.1080/00472778.2021.1896722
Galindo-Martín, M.-Á., Castaño-Martínez, M.-S., & Méndez-Picazo, M.-T. (2019). Digital transformation, digital dividends and entrepreneurship: A quantitative analysis. Journal of Business Research, 101, 522–527. https://doi.org/10.1016/j.jbusres.2018.12.014
Garofoli, G. (1994). New firm formation and regional development: The Italian case. Regional Studies, 28(4), 381–393. https://doi.org/10.1080/00343409412331348346
Hair J. F., Black W. C., Babin B. J., & Anderson R. E. (2010). Multivariate data analysis. (7th ed.). Pearson.
Kenney, M., & Zysman, J. (2016). The rise of the platform economy. Issues in Science and Technology, 32(3), 61–69.
Kizhakethalackal, E. T., Mukherjee, D., & Alvi, E. (2013). Quantile regression analysis of health-aid and infant mortality: A note. Applied Economics Letters, 20(13), 1197–1201. https://doi.org/10.1080/13504851.2013.799744
Koenker, R., & Bassett, G. (1978). Regression quantiles. Econometrica, 46(1), 33–50. https://doi.org/10.2307/1913643
Kraus, S., Durst, S., Ferreira, J. J., Veiga, P., Kailer, N., & Weinmann, A. (2022). Digital transformation in business and management research: An overview of the current status quo. International Journal of Information Management, 63, Article 102466. https://doi.org/10.1016/j.ijinfomgt.2021.102466
Li, K., Kim, D., Lang, K. R., Kauffman, R. J., & Naldi, M. (2020). How should we understand the digital economy in Asia? Critical assessment and research agenda. Electronic Commerce Research and Applications, 44, Article 101004. https://doi.org/10.1016/j.elerap.2020.101004
Liñán, F., & Fernandez-Serrano, J. (2014). National culture, entrepreneurship and economic development: Different patterns across the European Union. Small Business Economics, 42, 685–701. https://doi.org/10.1007/s11187-013-9520-x
Liu, T. -C. (2022). Digital policy in European countries from the perspective of the Digital Economy and Society Index. Policy & Internet, 14(1), 202–218. https://doi.org/10.1002/poi3.274
Nambisan, S. (2017). Digital entrepreneurship: Toward a digital technology perspective of entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055. https://doi.org/10.1111/etap.12254
Newman, C., Rand, J., Talbot, T., & Tarp, F. (2015). Technology transfers, foreign investment and productivity spillovers. European Economic Review, 76, 168–187. https://doi.org/10.1016/j.euroecorev.2015.02.005
OECD. (2020). International Compendium of Entrepreneurship Policies. In OECD Studies on SMEs and Entrepreneurship. OECD Publishing. https://doi.org/10.1787/338f1873-en
Reuschl, A. J., Deist, M. K., & Maalaoui, A. (2022). Digital transformation during a pandemic: Stretching the organizational elasticity. Journal of Business Research, 144, 1320–1332. https://doi.org/10.1016/j.jbusres.2022.01.088
Ritter, T., & Pedersen, C. L. (2020). Digitization capability and the digitalization of business models in business-to-business firms: Past, present, and future. Industrial Marketing Management, 86, 180–190. https://doi.org/10.1016/j.indmarman.2019.11.019
Skare, M., de las Mercedes de Obesso, M., & Ribeiro-Navarrete, S. (2023). Digital transformation and European small and medium enterprises (SMEs): A comparative study using digital economy and society index data. International Journal of Information Management, 68, Article 102594. https://doi.org/10.1016/j.ijinfomgt.2022.102594
Sun, C., Lin, Z., Vochozka, M., & Vincúrová, Z. (2022). Digital transformation and corporate cash holdings in China’s A-share listed companies. Oeconomia Copernicana, 13(4), 1081–1116. https://doi.org/doi: 10.24136/oc.2022.031
Torres, P., & Augusto, M. (2020). Digitalisation, social entrepreneurship and national well-being. Technological Forecasting and Social Change, 161, Article 120279. https://doi.org/10.1016/j.techfore.2020.120279
Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Qi Dong, J., Fabian, N., & Haenlein, M. (2021). Digital transformation: A multidisciplinary reflection and research agenda. Journal of Business Research, 122, 889–901. https://doi.org/10.1016/j.jbusres.2019.09.022
Von Briel, F., Davidsson, P., & Recker, J. C. (2018). Digital technologies as external enablers of new venture creation in the IT hardware sector. Entrepreneurship Theory and Practice, 42(1), 47–69. https://doi.org/10.1177/1042258717732779
World Bank. (2022a). Entrepreneurship Database. http://worldbank.org/en/programs/entrepreneurship
World Bank. (2022b). International Debt Statistics. https://www.worldbank.org/en/programs/debt-statistics/ids
World Bank. (2022c). World Development Indicators International Debt Statistics. https://databank.worldbank.org/reports.aspx?source=world-development-indicators
World Bank. (2022d). Doing Business. https://archive.doingbusiness.org/en/doingbusiness
World Bank. (2016). World development report – digital dividends. https://documents1.worldbank.org/curated/en/896971468194972881/pdf/World-development-report-2016-digital-dividends.pdf
Yamen, A., Coskun, A., & Mersni, H. (2022). Digitalization and tax evasion: The moderation effect of corruption. Economic Research-Ekonomska Istraživanja, 36(2), Article 2142634. https://doi.org/10.1080/1331677X.2022.2142634
Youssef, A. B., Boubaker, S., Dedaj, B., & Carabregu-Vokshi, M. (2021). Digitalization of the economy and entrepreneurship intention. Technological Forecasting and Social Change, 164, Article 120043. https://doi.org/10.1016/j.techfore.2020.120043
Zhang, J., van Gorp, D., & Kievit, H. (2022). Digital technology and national entrepreneurship: An ecosystem perspective. The Journal of Technology Transfer, 48, 1077–1105. https://doi.org/10.1007/s10961-022-09934-0